The ongoing US trade war with China is expected to have a significant impact on medtech suppliers, according to a recent public hearing.
US China
The trade war has been ongoing since president Trump announced the US would place a 25% tariff on $50 billion worth of goods from China. The tariffs (conducted under section 301 of the US Trade Law 1974) were issued in response to many goods included in Beijing’s “Made in China 2025” initiative: designed to transform China into a largely self-sufficient manufacturing powerhouse but in doing so, adversely affecting import and export practices with other nations.
For instance, the Made in China 2025 plan imposes much higher tariffs on US exports compared to what the US imposes on China and also places a tariff rate which is nearly three times higher than the US’, according to the Whitehouse.
In response to China’s trade practices, the US Trade Representative (USTR) imposed initial 25% tariffs on $34 billion worth of imports. The USTR continued its tirade on China on 23 August when additional $16 billion tariffs went into effect.
China responded in kind by imposing duties on US goods which caused the USTR to take further action through an additional 10% duty on Chinese products, totalling to an approximate trade value of $200 billion.
However, many in the medtech industry are concerned over how Trump’s tariffs will affect them and have raised worries over price increases for healthcare organisations and consumers.
Speaking at a public hearing on July 25, Jim Pigott, division group president at Medline Industries stated that “the proposed 25% tariffs will not advance the goal of Section 301 action and will have a disproportionately negative effect on our low margin business segments, thus greatly impacting hospitals, consumers, and the medical community.”
More so, Pigott believes that section 301 will not discourage China’s trade actions making the whole ordeal pointless, considering that it was issued in response to Beijing’s import/export practices. Indeed the tariffs are expected to affect manufacturers in the short term, impacting profitability and employment in the US, according to Pigott.
Earlier this year, the Medical Imaging Technology Association (MITA) responded to the tariffs, stating: “MITA has significant concerns about the proposed tariffs on the importation from China of medical imaging devices and the components used to manufacture medical imaging devices.
“While we understand and support the Administration’s commitment to a fair and balanced trading relationship with China, we do not believe that applying additional tariffs on medical imaging products and their components will serve this aim.
“Rather, we believe that the implementation of the proposed tariffs would cause harm to the U.S. medical imaging industry, including the hospitals and patients that we serve.”
More so, MITA conducted a survey of medical imaging manufacturers about the tariffs and found that 100% of manufactures said they would invest fewer resources in R&D and would also reduce workforce due to the tariffs.